More of the same last week as the market continued to churn and try to come to grips with the 2013 outlook. I think investors believe that we won't go over the fiscal cliff for very long but the real problem for me is the realization that, at some point, earnings estimates will have to be reduced unless the economy gets much stronger.

Earnings:The divergence between last twelve month earnings ($88.33) and projected earnings for the next 52 weeks ($110.21) just grows and grows. This is negative and results in a continuing zero exposure from this indicator.Twelve month forward earnings are still nudging higher and are positive with 100% exposure. My hybrid method that looks at this year's estimates and weights in 2013 in the second half is also positive and calls for 100% exposure.Total exposure from the earnings factor is 67%, same as last week.

Sentiment:Rydex leveraged fund investors finally crossed over from being super bulls to just ordinary bulls. I certainly don't want to make it a real big deal but it is at least some improvement. Exposure from this indicator now goes to +5%, up from -10% where it has been for months.Small option buyers are continuing in a neutral posture. Exposure stays at 50%, same as last week.NAAIM managers decided to get more optimistic. Exposure is 20% this week, down from 35% last week.Total sentiment factor exposure is 25% this week, up from 0% last week.

Valuation:Percentage of stock prices represented by net current assets stayed the same last week so exposure remains at 40%.Comparison of stock earnings yield to ten year treasury yield stayed the same last week. Exposure is 50% this week, same as last week.Total valuation exposure is 45%, same as last week.

To combine these three factors, I multiply them together and then take the cube root. Therefore, these three factors call for a market exposure of 42%, up from 0% last week.

Technicals:My comparison of yields on treasury bonds compared to lower quality corporates stayed negative last week. I subtract 10% to account for this. New highs - new lows on the Nasdaq is still hanging around the zero line and I still regard it as neutral. There is no impact from this indicator this week.Total technical adjustments this week are -10% and were -10% last week.

After adjustments, total exposure for the week is 32% but in an effort to cut back somewhat on volatility I am going to round off all my exposure numbers to the nearest 25th percentile. I have backtested this and it seems not to matter much. So, exposure this week is 25%, up from -10% last week. I have incorporated all the minor changes that I have made in the model since I started posting here in the model chart for this week. This is in preparation for a model that will not change at all in 2013. I've done all the tinkering I am going to do at this point and we will see how it plays out next